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    Russian Economy General News: #3

    AbsoluteZero
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    Post  AbsoluteZero Thu Jan 01, 2015 7:37 am

    Western media attacks Russia's new EEU

    Russia Starts A New Economic Union On New Year's And It Already Looks Like A Disaster

    it seems the business insider one of the many western news sources that is actively promoting alot of anti russian trashing
    GarryB
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    Post  GarryB Thu Jan 01, 2015 9:56 am

    Still waiting for Russia's Amazon.

    A huge opportunity... Amazon didn't actually produce anything... all they did was got a large population of customers in contact with products from a wide range of producers and acted as the middleman... collecting all the money and making sure the product got to the customer...
    Viktor
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    Post  Viktor Thu Jan 01, 2015 5:47 pm

    Nice  and about time thumbsup

    I hope this will lead to superior thinking in comparison to previous one !

    Russia begins to "tax maneuver"

    @kvs tnx for explanation !

    and Im in need of another one Very Happy

    whats the correlation between these two titles?

    Russia's international reserves for the week decreased by $ 10.4 billion

    Russian banks demand at auction REPO 15 days - 2.7 trillion rubles
    kvs
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    Post  kvs Thu Jan 01, 2015 6:49 pm

    Viktor wrote:Nice  and about time thumbsup

    I hope this will lead to superior thinking in comparison to previous one !

    Russia begins to "tax maneuver"

    @kvs tnx for explanation !

    and Im in need of another one Very Happy

    whats the correlation between these two titles?

    Russia's international reserves for the week decreased by $ 10.4 billion

    Russian banks demand at auction REPO 15 days - 2.7 trillion rubles

    I really do not know what the CBR is using the reserve money for. The REPO auctions are not tied to the reserves. In this case 2.7 trillion
    rubles is around 50 billion dollars so it is not the same pot of money. Clearly the CBR does not need to use reserve money for loans
    so there are other machinations at play.
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    Post  Vann7 Thu Jan 01, 2015 7:43 pm



    Interesting Keiser report.. in the end their guest in the show predict US dollar
    will cease to be the world currency ,and people will return to Gold and Silver standard.




    Even if 50% of that turns to be true.. and lets says BRICS and most Asia and latin america stop using dollars
    in most of their transactions.. The US GDP will pass the be cut in half.. at least... since a significant part of their GDP
    is based on selling paper dollars that people needs to use to buy energy for the agreements they created with the west.
    sepheronx
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    Post  sepheronx Thu Jan 01, 2015 7:51 pm

    Austin wrote:Any reason why Rouble is falling now its 60 ?

    Brent oil dropped from $60 to $57bbl, and add to the fact that Economics minister Ukelele or whatever the idiots name is talks too much, which gives ammo for speculators. So effectively, Russia and Russians are screwing their own currency.

    At $60/USD, it will make Russian products far more preferable. Right now though, there is a growing issue of domestic producers jacking up prices considerably, next to the imports. So they can cash in as most as they can. Which is price fixing and should be considered illegal.

    Eventually prices will have to go back or wages will have to adjust to meet this inflation.
    sepheronx
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    Post  sepheronx Thu Jan 01, 2015 8:37 pm

    AbsoluteZero wrote:Western media attacks Russia's new EEU

    Russia Starts A New Economic Union On New Year's And It Already Looks Like A Disaster

    it seems the business insider one of the many western news sources that is actively promoting alot of anti russian trashing

    They been that way for a long time.  Not surprising really.  They been predicting Russias downfall every year for years.  That said, EEU was Kazakhstans Idea and their comments are just silly.  Of course Kazakhstan said they can leave anytime and what not.  But they wont.

    And even if the currency value of the Kazakhstan is higher than Ruble, the products from Kazakhstan are still cheap due to much cheaper labor and production been around for a long time.  So the article is moot point. Tariff free trade would make the goods even cheaper.
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    Post  Vann7 Fri Jan 02, 2015 12:57 am



    interesting too..

    avatar
    Austin

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    Post  Austin Fri Jan 02, 2015 8:11 am

    kvs wrote:
    Viktor wrote:Nice  and about time thumbsup

    I hope this will lead to superior thinking in comparison to previous one !

    Russia begins to "tax maneuver"

    @kvs tnx for explanation !

    and Im in need of another one Very Happy

    whats the correlation between these two titles?

    Russia's international reserves for the week decreased by $ 10.4 billion

    Russian banks demand at auction REPO 15 days - 2.7 trillion rubles

    I really do not know what the CBR is using the reserve money for.  The REPO auctions are not tied to the reserves.  In this case 2.7 trillion
    rubles is around 50 billion dollars so it is not the same pot of money.   Clearly the CBR does not need to use reserve money for loans
    so there are other machinations at play.

    They intervened on Dec 30-31 with around $4 billion when Rouble reached 60 and beyond.

    The price of Oil Fall is small compared to the way Rouble is fluctuating.

    Could be some of those loans that companies has to pay by end of the year and rouble sold to buy USD
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    Austin

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    Post  Austin Fri Jan 02, 2015 9:14 am

    As oil falls, Russia choked by military, social spending


    (Reuters) - Russian authorities are facing some unpalatable options as they try to keep the economy afloat - unless they can persuade President Vladimir Putin to curb massive military spending.

    Officials fear that without limiting the defense budget, the government will have to raise taxes, increase the pension age or print money to prevent the state deficit from running out of control.

    Despite a crisis brought on by diving oil markets and Western sanctions, they believe Russia can muddle through next year provided the price of crude, its dominant export earner, holds near current levels.

    But even at $60 per barrel, the present oil price is little more than half what the Kremlin needs to balance the budget, and it is quickly running out of money.

    Without radical action, the officials are much less confident about 2016-17 - and even sooner, should global oil prices continue their slide towards $40.


    One senior government source expressed concern about the effects of an unchecked deficit on one of Russia's two funds built up from past oil income.

    "If no spending is cut and revenue risks persist, we will have a deficit of 4 trillion rubles. The Reserve Fund will be spent within 18 months," he said. "In 2016 we will have no resources to meet our budget obligations. Not to mention 2017."

    At current exchange rates, 4 trillion rubles equates to $71 billion, not far from the $89 billion that the Reserve Fund now holds.

    Sanctions imposed by the European Union and United States over Moscow's role in the Ukraine crisis have deepened the problems: foreign investment is down sharply, more than $100 billion has fled abroad this year, Russian firms and banks have lost access to international capital markets and privatization plans are on hold.

    The central bank has had to spend heavily from its reserves, which have dropped to just below $400 billion from $510 billion at the start of 2014, to arrest a steep slide in the rouble.

    DEFENSE DRAIN

    Spending will be cut 10 percent next year but Finance Minister Anton Siluanov said last week that this was not enough to balance the budget. Expenditure is dominated by social and defense commitments, and Putin had set military investment as a priority even before the stand-off with the West began when Russia annexed Crimea from Ukraine in March.

    Out of total spending of 13.96 trillion rubles ($248 billion) in 2014, social benefits account for over 33 percent, and defense and security 32.5 percent.

    Next year, military spending will rise to 35 percent of the 15.51 trillion rouble budget. That means about $100 billion for defense and security at today's exchange rates.

    At the same time, the weaker rouble will lead to higher inflation next year by pushing up import costs, threatening Putin's reputation for safeguarding Russians' living standards.

    The lion's share of social spending goes on pensions, and this will rise sharply due a rapidly aging population unless the government takes radical action by raising the retirement age from 55 years for women and 60 for men.

    "Without cutting military spending and raising the pension age, we won't muddle through. What options do we have? Raise taxes and print money, which triggers a downward spiral of inflation and higher interest rates," the government source said.

    "DRAMATIC DEVELOPMENT"

    In the shorter term, the biggest economic risk would be a further plunge in oil prices, even if they bounced back rapidly. A drop to $40 for just a few days could inflict great psychological damage.

    Earlier this month, the rouble fell as much as 20 percent against the dollar in one day after oil plunged and the central bank raised its main interest rate sharply. The authorities were forced to impose informal capital controls to cool the panic and slow the flood of money out of the country.

    Putin has said formal capital controls are not on the agenda. Officials are anxious to avoid such drastic action as this would inflict long-term damage on Russia's international financial reputation: investors will put money into a country only if they believe they can take the profits back out later.

    "We won't introduce capital controls unless there is a dramatic development," said a top-level government source. "I don't know if $40 per barrel will trigger it. For our country it is very bad, it is a tragedy. But whether it will trigger capital controls or not, I just don't know," the source said.

    In December 2008, oil fell during the global financial crisis to around $36 but even then Russia did not reinstate capital controls.

    "This crisis is more psychological, more emotional than those we have seen in the past. But in principle, the situation is not very different from 2008. We can always switch to measures we used in 2009," the source said, naming state guarantees and direct funding of troubled companies among possible measures.

    However, former finance minister Alexei Kudrin said the current crisis was different because of the sanctions. "To come out of the crisis, the government and the president should settle the conflict with leading powers, mainly Europe and the United States," he said last week.

    However, the top-level government source held out little hope for an easing of tensions with Washington. "Relations with the United States are frozen," he said.

    ($1 = 56.2950 rubles)
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    Post  Austin Fri Jan 02, 2015 9:21 am

    Not sure why Russia maintains Capital Account Convertibility and No Capital Control , No BRICS country has either of these and even country having more bigger and vibrant economy than Russia has implemented these two.

    High time they go for capital control and reduce capital account convertibility at certain threshold
    AlfaT8
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    Post  AlfaT8 Fri Jan 02, 2015 2:27 pm

    Austin wrote:As oil falls, Russia choked by military, social spending
    Reuters, really!? Suspect
    kvs
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    Post  kvs Fri Jan 02, 2015 2:29 pm

    These Russian officials need to be fired ASAP for fear mongering. Russia can run deficits just like Canada and the USA.
    I do not recall the enormous deficits in the USA being used to write America off.
    kvs
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    Post  kvs Fri Jan 02, 2015 2:53 pm

    http://johnhelmer.net/?p=12426

    Interesting synopsis of an interview with CBR head from the late 1990s to the early 2000s. His statement about Nabiullina
    is on the mark. He also brings up the vital aspect of capital accounts for exporters and controlling money flows:

    Asked what he had done at the CBR and would do now, Gerashchenko said: “Firstly, introduce certain controls. At the time [we] allowed to leave 50% of foreign exchange earnings for exporters to remain in their foreign currency accounts. In order not to lose, especially if they had to buy things to improve our own products, machines or other things. Here the CBR began to allow these foreign currency accounts. Then, when we started to improve things, we reached the point where 75% could be left on the foreign exchange accounts.
    kvs
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    Post  kvs Fri Jan 02, 2015 3:04 pm

    So Sberbank has raised its mortgage rate to 16%. This proves to me that the whole CBR rate policy is absurd and undermines
    Russia's economy. A rate of 16% has no relationship to reality. The Russian inflation rate is not 16% and Russia is not even
    in a recession.
    kvs
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    Post  kvs Fri Jan 02, 2015 3:11 pm

    http://www.alhambrapartners.com/2014/12/31/occams-oil/

    Russian Economy General News: #3 - Page 25 ABOOK-Dec-2014-Crude-Asian-Flu

    The current oil price drop has nothing to do with some American engineered economic attack on Russia. We are in
    another recession but the media says nothing about it.
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    par far

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    Post  par far Fri Jan 02, 2015 3:49 pm

    AlfaT8 wrote:
    Austin wrote:As oil falls, Russia choked by military, social spending
    Reuters, really!?  Suspect



    It is just Zionist propaganda, these bastards do this all the time.
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    Post  par far Fri Jan 02, 2015 4:07 pm

    The Russian economy has to adopt and it is going to take a few years, President Vladimir Putin have to stop people inside Russia(former and current) from raising fear(tell them to stop or they will be put in jail or better shot).

    Cutting military spending is just dumb and that won't happen, with the Zionist jews all round, that would not be good.

    Russia needs to do more currency swaps with other countries(if US thinks it can screw with Russia and get away with it they are wrong).

    Russia needs to do what is being done to them and that is speculators, speculating against Russian Ruble and the oil. Russia should start speculating against the us dollar(saying we do currency swaps lined up etc etc) and the countries that put sanctions on Russia(just make up bullshit like they do). Speculating the jewish Saudi Arabia could do wonders for the oil prices(say that they under stress and are going to be cutting oil prices or a cyber attack on their oil infrastructure could also be done(although  I'd prefer a Bulava attack).


    Cause problems for US in Afghanistan, close the Russian routes that the jewish NATO is using to get equipment into Afghanistan. Start arming people in Afghanistan and start sending US troops in body bags(this is kind of last resort).

    Biggest thing of all is don't panic, that is what they want you to do, there so many ways Russia can hit back.
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    Post  Austin Fri Jan 02, 2015 5:03 pm

    kvs wrote:These Russian officials need to be fired ASAP for fear mongering.   Russia can run deficits just like Canada and the USA.
    I do not recall the enormous deficits in the USA being used to write America off.

    Indeed , Even India runs budget deficits of 3-4 % the saving grace for us in 2014 is the low oil price which reduced fisical defict at ~ 3 %

    Can you explain the following

    1 ) Why cant Russian start its own QE where they print money and provide loans at 1-2 % interest rate ?

    Is Russia limited because its currency is not global currency hence any increase in printing might lead to massive inflation ?

    2 ) How about increasing its Public Debt to 25 % and lend it to banks ?
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    Post  kvs Fri Jan 02, 2015 5:18 pm

    Austin wrote:
    kvs wrote:These Russian officials need to be fired ASAP for fear mongering.   Russia can run deficits just like Canada and the USA.
    I do not recall the enormous deficits in the USA being used to write America off.

    Indeed , Even India runs budget deficits of 3-4 % the saving grace for us in 2014 is the low oil price which reduced fisical defict at ~ 3 %

    Can you explain the following

    1 ) Why cant Russian start its own QE where they print money and provide loans at 1-2 % interest rate ?

    Is Russia limited because its currency is not global currency hence any increase in printing might lead to massive inflation ?

    2 ) How about increasing its Public Debt to 25 % and lend it to banks ?

    1) The US does indeed have vastly more "sterilization" capacity for its QE. Printing US dollars like Pancho Villa printed pesos has
    no immediate impact on US inflation because the money actually goes abroad. The demand for dollars is high around the world.
    As long as this demand persists the US dollar will retain its value. If the demand collapses then there will be an inflation tsunami
    that will hit the USA.

    2) The Russian banks just need to be able to deal with the CBR at reasonable interest rates. Not 17% but 6%. The Russian
    government needs to run a deficit for the next few years to maintain economic momentum. Austerity during recessions is
    for retards. It is popular to bash Keynes at websites like zerohedge, but they are all totally clueless about what he advocated.
    No government actually follows the advice of Keynes. His idea was very solid: the government accumulates reserves during
    boom times and spends them during recessions/depressions. This sound fiscal policy would create a governor on the economy
    that would reduce the amplitude of the "business cycle". Instead of killing business with high interest rates during boom times
    (in the case of Russia they are running high interest rates during recessions as well which is simply bizarre), taxation on profits should
    be imposed. Big companies with big profits can afford to pay taxes. Small startup firms cannot afford high interest rates and
    do not have to pay high profit taxes.
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    Post  Werewolf Fri Jan 02, 2015 5:20 pm

    The one benefit of the USD is that it does not get hyperinflation by printing like crazy, because due the Bretton Woods it is a reserve currency and countries have to buy with their own currency free floating USD to have capability to trade on international market. The other point is that since USD is run by a private bank the FED and the FED has rating agencies which are all working for them, will not openly say the actual value of the USD to what it is now to what it was, since US has a monopoly in exact this two things along with their sidekick project EU and FIAT money printing Central bank in Frankfurt, those values and exchange rate and flation to its own value are decided by Rating agencies and the FED, if russia was going to try printing its money like FIATmoney they would open a big devaluation door for the West to further attack the ruble via FED and rating agencies. This works only if you are the Mafia and a monopole at the same time, if eveyone would just adjust to this unfair system and would try to do the same thing, they would run into serious problems and trying to alter the current Petrodollar monopoly already exterminated some decision makers in wars, see Gaddafi,Saddam.

    If russia wants to adjust the System to its own benefit it has to terminate all laws and treasons in its country, that means complete ban of USD, federalisation of CBR, jailing of every single speculant, NGO that are operating within financial/economy sector and than they can hand out loans with no Interest that would benefit the entire country and would be for the first time a functioning Economy, because today we have an utopia of market, for every printed currency the bank that prints it wants interest, meaning debts will always be hire than actual money or even fictual money on this planet, the entire society and economy of this so called "free market" revolves only around the system that everyone re-directs his debts to someone else it is a spiral of debts that are impossible to be paid back, created by banksters because the are greedy f*cks.
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    Post  TheArmenian Fri Jan 02, 2015 5:31 pm

    And the Canadian Dollar has dipped again. It is at 85 cents to a US$.
    sepheronx
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    Post  sepheronx Fri Jan 02, 2015 7:37 pm

    CBR needs to be rid of from Sberbank, thus access to the FOREX for CBR would be very limited.  Technically, Sberbank is 50% owned by CBR which, CBR being a private entity, isn't supposed to have that which brings conflict of interest, and could be a valid reason for audits against CBR.  And instead of blowing billions to lift a floating currency (which is then not solving the issue but prolonging the inevitable), that money should be used as a way to provide loans at low interest rates and re-invested into the Russian economy.  Shamelessly blowing billions to a currency that is falling because of speculators attacks, is just going to make things worst.  Instead, go after the speculators at home.  The ones abroad? Bar then from Russian economy altogether.

    Sberbank will learn pretty darn quickly that raising interest rates on their mortgages will create more problems then anything, and they will lose hugely in giving mortgages because no one will end up purchasing a home at those rates. Most Russians can afford this thanks to most of them having a home already due to soviet era.  Back in the 80's here in Canada, most people didn't thus a lot of people had a home but no money for anything else.

    As for Reuters article, they just made themselves look foolish.  First they said that it will have to drop 10% military spending, but this year, it will be higher than last year.  I am pretty certain that just went the opposite direction of where they were trying to go with in that article.  Add to the fact, they said there wont be a drop in military spending.  The economist is simply looking at how much money they have in their hand, and how much of it will be gone due to military spending.  But what he isn't looking at, is how many jobs that money in his hand is being created, how many companies will gain a profit, and how much of that money is going to come back in the form of taxation. But, you can just look up Reuters lies on google and see that they lie quite often.

    As for raising taxes?  Sorry to say, but Russia's tax system is heavily under taxed compared to every other country.

    Tax laws of Russia: http://www.worldwide-tax.com/russia/russia_tax.asp

    Income tax of a none foreigner in Russia is 13%.  That is very low.  I am paying (myself) a rate of over 25% in income tax and I am not mr money bags.  It is the corporations and foreigners that get taxed semi-hefty.  I am not against this either.  But it isn't even the federal government that is heavily taxing the companies, but regional governments that are, as federal tax on profits of a company in Russia is 2% while regionals are higher (upwards to 18%).  Social security tax is placed on the Businesses.  Technically, Russian tax system is very good and should be the drive for any business to operate there.  Especially now where they are allowing new companies tax exemptions of up to 2-3 years, is the biggest one.

    Here is what I think: The Russian government needs to set up their own bank.  A bank of Russia that isn't private or tied to IMF (IMF are the ones always talking about austerity and obviously trying the same thing in Ukraine).  But, a bank that is tied directly to the Russian market (so no foreign entities) and thus, only ties into the demands and needs of the country as a whole.  Use any excess money and what not, as a way to fund the bank.  The bank than should be able to set up loans and what not at rates of their own choosing's that has nothing to do with the Rubles value outside of the country, as it wouldn't work with outside entities.  So it would be able to give mortgage rates at 5% and business loans at same rate (remember, back in 2008/9, private entities like pawnshops were able to provide loans to businesses and such, at 5% interest rates, while the CBR was at 13% interest rates).
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    Post  sepheronx Fri Jan 02, 2015 7:57 pm

    Here is a breakdown from Finmarket for next year: http://www.finmarket.ru/main/article/3909521

    Seems pretty....well, nothing to think of really. Refinance rates are at 8% and new ones are 17%. Deposit interests are higher though so a lot more money will end up in the banks and more people will have more profits from their deposits.

    Taxation on dividends from 9% to 13% and a harsher penalty for companies not complying with the health law for their employees raised from 5K Rubles to 200K Rubles.

    That is it.

    During tough times, there needs to be some stuff to look at regarding the social spending. During tough times, a welfare state does not work.
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    Post  sepheronx Fri Jan 02, 2015 9:21 pm

    kvs wrote:So Sberbank has raised its mortgage rate to 16%.   This proves to me that the whole CBR rate policy is absurd and undermines
    Russia's economy.   A rate of 16% has no relationship to reality.   The Russian inflation rate is not 16% and Russia is not even
    in a recession.  

    Pretty much, it is pure greed. Although it will come to bite them back in the ass as no one will acquire such a mortgage. Chances are, other entities will start to provide mortgage loans at cheaper rates.

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